{"text":[[{"start":10.72,"text":"Japan’s largest banks and insurance companies have been buying domestic government bonds and selling foreign debt in recent months, in moves that investors say could be early signs of a wider repatriation of capital by the country’s institutions."}],[{"start":25.12,"text":"According to FT calculations based on data from the Japan Securities Dealers Association, large banks and insurers have together bought a net ¥5.4tn ($34bn) of Japanese government bonds with a maturity of two years or more in the five months to August."}],[{"start":41.08,"text":"The moves, which together represent the largest value of JGBs bought over a five-month period since the start of 2023, come as yields have surged to multi-decade highs and the central bank’s policy rate is at its highest in 31 years."}],[{"start":56,"text":"Sharp volatility in bond markets such as the US and France also appears to have prompted Japanese banks to sell out of foreign debt, with sales rising to ¥2.5tn in September, according to Ministry of Finance data surveying major investors."}],[{"start":70.4,"text":"In the first nine months of 2026, banks’ net sales of foreign debt were higher than in the same period of any other year since 2005."}],[{"start":79.16,"text":"“JGB yields are now back up to levels that allow domestic investors to park their money at home rather than chase returns abroad,” said Chris Scicluna, head of research at Daiwa Capital Markets Europe."}],[{"start":90,"text":"“Everyone is watching to see if these new purchases of JGBs and sales of foreign bonds are the start of a longer-term trend of capital repatriation,” he added."}],[{"start":null,"text":"
"}],[{"start":100.48,"text":"Speculation has been growing this year about the possibility of Japan’s institutions — including the massive $2tn Government Pension Investment Fund — finally repatriating some of the vast quantities of capital they have invested abroad in recent decades due to the higher yields now available at home."}],[{"start":117.72,"text":"Many investors fear that, while boosting the Japanese government bond market, such a shift could hit foreign stock and bond markets hard, at a time when many governments’ borrowing costs are already being driven higher."}],[{"start":129.44,"text":"It could also lead to a sharp rise in the yen, say analysts, which in turn could trigger a wave of selling of international assets by foreign investors who had borrowed the Japanese currency cheaply to buy higher-yielding assets elsewhere."}],[{"start":141.04,"text":"A major factor behind the recent shift has been the expectation that Japanese interest rates — which for years were zero or negative — will remain in positive territory for the long term."}],[{"start":152.72,"text":"“The BoJ’s more credible normalisation [of monetary policy] is helping anchor expectations that JGB yields will settle at higher levels,” said Masahiko Loo, senior fixed-income strategist at State Street Investment Management."}],[{"start":null,"text":""}],[{"start":166.6,"text":"Yields on Japanese 30-year bonds have surged from less than 2.3 per cent at the start of last year to a record high of 4.27 per cent earlier this month, while the 10-year yield hit a 30-year high this month. Yields rise when prices fall."}],[{"start":182.52,"text":"Rising currency-hedging costs for a Japanese investor holding foreign bonds are also a factor, say analysts."}],[{"start":189.14,"text":"“JGBs are becoming a credible contender in the competition for global capital,” said Loo."}],[{"start":null,"text":""}],[{"start":195,"text":"Japan’s net portfolio investments into US long-term government bonds have, meanwhile, turned negative this year, according to BoJ data, with net sales at their highest since 2022."}],[{"start":206.08,"text":"The shift in flows could have major implications for foreign government borrowers who had previously looked to yield-hungry Japanese investors to help mop up their issuance, analysts say, particularly with advanced economies forecast to post their biggest budget deficits since 2021."}],[{"start":221.88,"text":"“Historically, the US and European economies including France were big beneficiaries of Japanese bond investors searching for better returns abroad,” said Scicluna. “As the BoJ further normalises, this support could come to an end just when these bond markets need it most.”"}],[{"start":239.16,"text":"Analysts say the trend is still at a very early stage and it is not clear that money is being taken straight from foreign bonds and put into domestic bonds."}],[{"start":247.32,"text":"Stephen Spratt, a rates strategist at Société Générale, said that while it was clear from the data that Japanese banks were reducing their foreign bond exposure, their JGB buying had not yet risen convincingly."}],[{"start":259.08,"text":"He pointed to BoJ data showing year-on-year loan growth for the major banks of 7.9 per cent in August, suggesting this was a more profitable destination for them to allocate capital to than JGBs."}],[{"start":270.28,"text":"Despite the shifts among banks and insurers, there are few signs of a wholesale shift by Japanese investors. Pension funds, for instance, have bought a net ¥11.4tn of foreign long-term bonds so far this year, according to FT calculations based on MoF data surveying major investors."}],[{"start":287.18,"text":"For now, changes in buying and selling patterns by Japanese pension funds appear to be mechanical adjustments to recent market action rather than the result of a more fundamental reallocation, say analysts."}],[{"start":298.28,"text":"“I think it is too early to say that repatriation is happening,” said Shoki Omori, chief strategist at Deutsche Bank in Tokyo, adding that Japanese investors’ purchases of German and other European government bonds suggest they are looking for “safer assets generally”."}],[{"start":313.68,"text":"He added: “I would want to see clearer evidence of life insurers selling foreign government bonds. We simply don’t have enough data yet.”"}],[{"start":325.22,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791963314_7816.mp3"}